Profile: Entrepreneurs with flair at Lan 1

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This article appeared in the March, 2010 issue of CRN magazine.

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Profile: Entrepreneurs with flair at Lan 1

For a company that started out "by accident", Lan 1 has achieved a great deal during its 18 years. The storage and networking distributor, founded in 1992 to support what was eventually an unsuccessful software development exercise, now boasts 1000 channel partners, 55 staff, a nationwide presence, and 35 percent growth year-on-year.

Lan 1 was founded by Daniel Lee, John Hamill and Chip Hilts to fund San Francisco-based FaxHQ, which specialised in fax server software for Novell networks. "We were still young then, and would do a lot of things for love," recalls Lee, who is now Lan 1's managing director.

But after four years and a net loss of $100,000, the trio decided to sell FaxHQ to a US company and focus their efforts on positioning Lan 1 as a value-added storage distributor in Australia. "It was a hard decision but we decided distribution offered a better way forward," Lee says.

"We focused all our effort back into Lan 1. Our mission is to provide the best of breed products with noticeable difference in services, [and] the tag line was ‘We Network Your Storage'."

Lan 1 focuses on four main technologies: IP storage; IP networking; IP security; and IP CCTV and access control. It works with 21 vendors, most of whom have been partners for more than a decade.

"Our criteria for vendor selection is based on agreed principles and values," Lee says. "We have an agreed go-to-market strategy; we believe in channel centricity."

Meanwhile, the company aims to foster close relationships with its channel partners through dedicated account managers, business development managers, product managers and teams of engineers at its offices in Sydney, Melbourne, Brisbane and Perth.

It provides certified training, as well as assisting its channel partners with designing, configuring and commissioning the products and systems it distributes.

Last month (February 2010), Lan 1 launched a new website to provide better electronic support to its channel partners. The site aims to provide easy access to case studies and product information as well as automating processes such as product configuration and licensing renewal.

"We are continuing to improve our internal systems, capabilities and also resources [for] our channel partners," Lee tells CRN. "Our channel partners are our lifeline," he says. "We work strategically with them and without them we will have no business."

As things stand, business is doing well. Lee says the company grew by 35 percent in 2009, and has increased its expenditure by 30 percent.

The silver lining 

Lee views the global financial crisis as a boon to Lan 1. During the past 24 months, the company has acquired two competitors; the broadband division of Melbourne's TR Telecom last September and Sydney-based enterprise security distributor Blue Sky in 2008.

And while the credit crunch has given finance departments a greater influence on spending, customers continue to update their IT for its benefits to productivity, Lee says. "Last year was a good year for us," he tells CRN. "Luckily, technological evolution, which leads to productivity gains and also network speeds, continue to drive the need to refresh IT."

"The number of resellers, distributors and vendors going under or [being] taken over due to financial stress is also a clear [message] to all businesses that we need to be profitable," he adds.

But profits aren't everything; not to Lee, at least. He names as his most memorable experience a project in 2006 on which Lan 1 worked with Motorola and Queensland-based ISP, CommsLogic, to provide wireless broadband to regional Queensland.

The deal, worth about $1 million for Lan 1, was part of CommsLogic's plans to eventually provide all its customers with broadband connectivity. Lan 1 supplied Motorola's Canopy Advantage wireless broadband equipment as well as assisting with designing the network, help desk and deployment.

All negotiation was completed within a month and the network was servicing 55,000 users within the first year. "Of course, profit is always the first concern for a business," Lee says, "but you feel happiest and most complete when you're able to give and not just receive."

"I am very proud of this achievement as otherwise, those customers would not have a broadband service," he says.
"They had no cable, no DSL. Broadband service is very similar to a utility service today; being a parent, I know the importance of broadband availability for education."

Lan 1 employs 45 full-time staff and 10 contractors in Australia. Finance and logistics personnel are located only within its Sydney headquarters, while pre-sales engineers and sales personnel staff all branches. The company thrives on a "happy and healthy" working environment and strives to maintain a "mojo", which Lee describes as drive, momentum and a desire to succeed.

"The culture is important," he says. "After all we are an 18-year-old company. We have staff members who have been with us for over 15 years, and we have new recruits with us for less than three months. So there is a strong leadership group willing to lead and share the experience with new recruits.

"As we are in the growth mode, there is a lot of pressure to perform but I am also mindful of ensuring all the staff have been given the right training, facilities and necessary support to achieve their potential and of course, company growth," says Lee.

A regional thinking

A Singaporean who has spent half his life in Australia, Lee says he sometimes feels culturally displaced. When he arrived in Australia to study electrical engineering at the University of New South Wales 20 years ago, he had intended to return home upon graduating.

"There are two things that you can't do when moving to Australia for university," he says. "You can't fall in love with the place, and you can't fall in love with a woman."

"I did both," he laughs.

Lee entered the Australian workforce as a test engineer at Thomson Sintra Pacific, where he recalls feeling undervalued and overlooked. With the encouragement of his family, he left the job to start his own business. After a quick foray into the fashion industry, he started Lan 1.

Comparing Australia with other countries in the Asia-Pacific region, Lee says Australian businesses tend to focus too much on corporate governance. "I think it's a great place to learn about corporate governance, but probably not a good place for the entrepreneurial spirit," he says.

"Australia is a unique country and I believe we have a lot to contribute to the growth potential of APAC," Lee tells CRN. "I can certainly tell you that the Singaporean way of doing business will not work in Australia. It took me a while to get used to it, but I'm proud to say that Lan 1 is a very Australian company," he says.

Lee's Asian heritage and English, Mandarin and Malay language skills were of great value to the company in its early days, especially in signing and dealing with Taiwanese hardware vendor Tekram.

The companies have since gone their separate ways, and while most of Lan 1's current vendor partners are US-based, Lee hopes to do more work in the APAC region in future.

"There's always this thing about going back home," he says. "If I do get the chance, I'd like to get my MBA, and I'd like to work in APAC for 10 years."

Currently, Lan 1 is privately owned by Lee, technical director Hamill and finance director Anthony Wong. Going public, Lee says, is a dream; but a public listing is likely to require the company to be reorganised, which may take one to two years and may affect Lan 1's "entrepreneurial spirit".

Larger companies have been sniffing around Lan 1, but Lee says "If it's doing so well, why would we sell? And we're still too young to retire." Instead, Lee hopes to position the company for a management buy-out, with the current directors retaining at least 30 percent ownership of the company.

He plans to grow Lan 1 by at least 30 percent annually for the next three years and is building a stable environment of management and middle-management who will be able to take the reins when the time comes. "We want to get into a position where we can retire," Lee tells CRN.

"I'm 40 years old, and although [some] say after 40 you're over the hill, I'm on fire."

Harking back to his younger days and dreams of a "labour of love", Lee hopes that dividends from Lan 1 will allow him to leave the commercial sector for charitable work one day.

"I think I'm idealistic still, but now I know that money is important too. I hope you call that maturity."

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